38464
Moody’s Downgrades Saudi Banks
World Economy

Moody’s Downgrades Saudi Banks

Moody’s Investors Service changed its outlook for Saudi Arabia’s banks to negative from stable on the expectation that bad loans will rise over the next 12 to 18 months because of low oil prices and a decline in government spending.
Non-performing loans will rise to about 2.5% of total loans over the period, from a “very low average 1.4% in September 2015,” Olivier Panis, a vice president at the ratings firm, said in a statement on Wednesday. Banks will also remain exposed to loan defaults owing to their “persistently high single-party exposures,” the analyst said, Bloomberg reported.
Saudi Arabia’s economic growth will slow to 1.5% in 2016 and 2% in 2017, well below the 3.4% growth estimated for 2015 because of the impact of lower crude prices, according to Moody’s. Banks’ loan growth will slow to between 3% and 5% in 2016, from 8% in 2015 and 12% the previous year, it said.
Still, capital buffers of Saudi banks are likely to remain “solid,” with the sector’s average tangible common equity ratio remaining stable at about 15.7% at the end of 2016, compared with 15.4% in September 2015, Moody’s said. Profitability is also likely to remain strong because of the banks’ lean cost structures and zero corporate tax, it said.
“Tightening liquidity—as public-sector deposit inflows and corporate profits moderate—will likely expose banks to greater funding volatility in line with regional pressures,” Khalid Howladar, a senior credit officer based in Dubai, said in the report. “However, we expect the local impact to be manageable and funding structures to remain relatively stable thanks to a broad and growing depositor base.”

Short URL : http://goo.gl/fidK2P
  1. http://goo.gl/ymoYLd
  • http://goo.gl/T0S202
  • http://goo.gl/N1IY1n
  • http://goo.gl/rjSC6z
  • http://goo.gl/zz3ppl

You can also read ...

Japan the Land of Rising Robots
While automation will eliminate very few occupations entirely...
Coinbase says these assets will require additional exploratory work and cannot guarantee they will be listed for trading.
Coinbase Inc., the US cryptocurrency exchange that lets users...
China’s role in WTO has increased a lot with its exports increasing  seven times and imports six times.
Members of the World Trade Organization highlighted the...
President Mauricio Macri earlier ruled out a policy laid out in the IMF document—maintaining taxes on soybean exports.
The International Monetary Fund expects Argentina’s government...
EU to Forge Trade Alliances With China and Japan
The European Union’s top officials will meet the leaders of...
Inflation has declined to its lowest level  in more than two years.
The International Monetary Fund says Nigeria’s economic...
East African region has managed to reduce extreme poverty by 23%.
The East African region has enjoyed a more resilient economic...
Vietnam Property Developers Attract FDI
Amid narrowing credit sources and rising lending interest...

Trending

Googleplus